Administrative Crimes: Testimony of Roger Marzulla

[Testimony of Roger J. Marzulla Before the Judiciary Committee of the House of Representatives Subcommittee on Commercial and Administrative Law May 7, 1998]

Mr. Chairman and Members of the Subcommittee:

Thank you for the opportunity of addressing the need for congressional leadership in connection with criminal prosecution of regulatory offenses.1 Each year government agencies publish more than 65,000 pages of new regulations— many of them complicated, unclear and conflicting —with which we are all expected to comply. Combine this with the myriad of statutes (Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, Forest Management Act, Endangered Species Act) which provide criminal penalties for violation of those regulations, and the fact that courts generally defer to an agency's interpretation of its own regulations, and it is little wonder that thousands of Americans find themselves behind bars for crimes defined not by Congress, but by the agencies that prosecute them.

I previously served as Assistant Attorney General in charge of the Environment and Natural Resources Division of the U.S. Justice Department, where I was responsible for all environmental litigation on behalf of the United States, both civil and criminal. I have worked extensively with all of the major environmental regimes, including the prosecution of civil and criminal actions on behalf of EPA, the Interior Department, NOAA [National Oceanic and Atmospheric Administration], the Corps of Engineers and the Forest Service, among others, to enforce our nation's environmental laws and regulations. Thus, I have seen regulatory criminal enforcement from the perspective both of prosecutor and defense counsel.

Today I will address three issues:

Congress has given away to administrative agencies the power to define regulatory crimes, as well as to enforce them. This, as four justices of the Supreme Court said not long ago, constitutes a threat to liberty and democracy— and is probably unconstitutional.

The Chevron doctrine, which allows agencies to promulgate ambiguous regulations, then "interpret" them for the court, dangerously concentrates both the judicial and prosecutorial power in the hands of the agency.

Finally, by reading the "knowing" requirement out of many regulatory crimes statutes, the courts have created a strict liability scheme under which regulated entities and individuals who acted in good-faith compliance with what they thought the law was end up in federal prison despite the best of intentions. Mr. Chairman, I am not talking about hardened criminals and lawbreakers. My concern is for the ordinary, upstanding Americanssmall businessmen, farmers, merchants and contractors, who are suddenly and unjustly thrown into the criminal courts (and often federal prison) through no fault of their own and despite their best intentions. This is a shameful injustice which Congress has the power and the duty to remedy.

I. CONGRESS HAS GIVEN AWAY ITS POWER TO DEFINE WHAT IS A REGULATORY CRIME.

In far too many instances, Congress has passed statutes which allow criminal prosecution for virtually any violation of regulations adopted by a federal agency. Examples of these include the Clean Water Act2, the Clean Air Act3, the Resource Conservation and Recovery Act4, the Endangered Species Act5, and the Forest Management Act.6 As a result, agency rulemaking has become the functional equivalent of congressional lawmaking and, as agencies pump out tens of thousands of new regulations each year, they simultaneously are creating thousands of new federal felonies which can be (and often are) prosecuted with the full force of the criminal law. Since Congress rarely conducts oversight of these regulatory criminal programs, the initial statutory authorization (generally enacted decades ago) amounts to a blank check for the agency to create as many new federal felonies as it wishes without any accountability. The unchecked power to legislate crimes and then prosecute their violation constitutes the precise excessive concentration of power in one branch of government, which the Founding Fathers sought to avoid by separating our government into three branches, and assigning limited powers to each.

Not surprisingly, federal agencies have eagerly grasped the intoxicating power to imprison those who do not adequately observe their various regulatory regimes—as the agencies interpret them. Agencies like EPA, Fish and Wildlife, NOAA, the Corps of Engineers, and the Forest Service (to choose examples within my personal experience) can hardly be blamed for utilizing this potent weapon in the difficult job of implementing their congressionally mandated programs. Indeed, having been given this enormous power by Congress, regulatory agencies may reasonably assume that they are intended to use criminal prosecution as a routine part of their regulatory programs. Add to this prosecutorial blank check a dash of excessive zeal, and Congress has created a recipe for agency oppression of the kind glimpsed in the recent hearings on Internal Revenue Service's enforcement abuses by another Committee of this House. Congress's abandonment of its criminal lawmaking power to the regulatory agencies is wrongheaded—and probably unconstitutional.

Respect for the law and agency programs is destroyed when even minor regulatory violations (such as paperwork, reporting, signposting and similar technical violations), which are unintentional (and often unavoidable) are prosecuted just like intentional crimes that endanger person, health, property, or safety;

Agencies are encouraged to play "gotcha" with regulated entities in order to prove their zeal in racking up large numbers of criminal violations, rather than assisting businesses and individuals to understand and comply with reasonable regulations.

Business—especially small business—is forced into a defensive, "checklist" approach to regulatory compliance, in which the goal is just to avoid prosecution—at the expense of economic vigor and the liberties and blessings of our free market system; and Constitutional principles of separating lawmaking and criminal prosecution, to avoid tyranny by one individual or group, are violated.

I will now discuss each of these points in turn.

First, our system of law is built on a hierarchy of penalties for legal infractions of various degrees of moral or social culpability. The law reflects society's determination that a parking ticket should not be punished the same as murder in the first degree; murder is more culpable, and it therefore requires a much more severe penalty. Prioritization of these penalties—and thus the determination of what legal violations the law deems most serious has been entrusted to our elected representatives in Congress. To commit a federal felony ought to be a very grave matter indeed, punishable by severe penalties and societal disapproval.

Federal agencies, on the other hand, do not have this point of view, nor do they have the responsibility for safeguarding the integrity of the federal legal system. EPA is charged with environmental protection, Fish and Wildlife with protecting endangered species, the Corps of Engineers with wetland protection, OSHA with worker protection, the Office of Surface Mining with mineland protection, etc. For each such agency, its regulatory program is its top—if not its only—priority. Little wonder, then, that these agencies rank violation of their regulations as the highest priority criminal offense, giving little or no thought to the relationship between penalties imposed by that agency and rest of the criminal law regime. After all, it is the job of Congress to strike a balance between regulatory and other criminal or civil penalties by passing laws appropriately penalizing legal infractions.

But when an individual faces the same federal prison time, for improperly filling out a required form, that a rapist or drug dealer receives, he is justified in questioning the legal system which criminalizes his relatively benign actions. Unjust imprisonment—a staple of repressive governments and police states—may engender fear of the law, but not respect for it. Yet today in the United States the ordinary, lawabiding citizen runs the risk of violating one of thousands of complicated (and even conflicting) regulatory requirements, with federal prison as the consequence. This is simply unAmerican and unacceptable to anyone who believes in the true purpose and genius of the law as an expression of our noblest societal and national goals.

Second, regulatory agencies are encouraged to seek the publicity and budgetary rewards which flow from headlines like "Agency Indicts Corporation for Federal Felony." Ironically, EPA and other regulatory agencies trumpet annual increases in the number of criminal indictments as though we should be proud that there are more and more environmental (or other regulatory) criminals.

Imagine a police force congratulating itself on the fact that prosecutions for rape, murder or drug dealing are at record rates. The dramatic increase in federal regulatory prosecutions in this country either means that Americans are becoming increasingly more lawless (causing us to question our current approach to regulatory enforcement), or to conclude (rightly, I believe) that we have more and more prosecutors and investigators chasing more marginal cases in order to justify their increasing agency enforcement budgets.

At a minimum, Congress should inquire carefully into the kinds of regulatory crimes being prosecuted in order to answer this question. Agencies should be required to explain their choice of cases to prosecute and the penalties sought. Congress, in short, must become reinvolved in our nation's regulatory criminal justice system; it cannot be left solely to the agencies to determine what is criminal, and what is not.

Third, it is not surprising that a repressive regime of apparently arbitrary and unjust federal regulatory prosecutions has lead businessmen and individual citizens to operate defensively in their dealings with agencies. The compliance officer for environment, safety and health in many corporations is referred to (only half jokingly) as the "designated felon" because he must sign the myriad reports and applications that must be submitted almost daily to federal agencies. He knows that a single mistake on one such document can land him in federal prison. The result is the focusing of enormous resources on the technical details of compliance with paperwork and similar requirements—often at the expense of huge possible gains in productivity, worker safety, and public health which could otherwise be achieved. A frightened, defensive company is not the model of our dynamic system, which has brought this nation the highest standard of living in the world. We are drowning in regulatory requirements, backed up by overzealous criminal enforcement, costing us more than money—costing us our liberty and boundless optimism in the future of the United States.

Finally, Congress may not hand over to the prosecuting agency the power to create and define those crimes which it then prosecutes without running afoul of the constitutional principle of separation of powers. The Framers rightly determined that those who hold the power to imprison should not also be entrusted with the power to create and define the offenses for which imprisonment may be imposed. The risk they sought to avoid was the inevitable risk that the prosecutor could first choose the individual or group he sought to punish, then define the law so as to insure a conviction. Thus, Congress is forbidden from passing a bill of attainder, determining culpability for a violation of law. Similarly, executive branch agencies may not be delegated lawmaking power, since lawmaking is the province of duly elected officials. Thus, guilt may not be determined by popular vote, and laws may not be made by unelected government officials.

Yet a statute which makes any regulatory offense punishable as a crime fuses the lawmaking and prosecuting authority in a single agency. A regulation is, after all, simply a law that was not passed by Congress. Although administrative penalties may be imposed for regulatory violations without infringing on constitutional prohibitions, when the criminal law is invoked the constitutional limitations come into highest resolution.

It is a wellestablished principle of due process that a regulated entity cannot be held liable for penalties when it did not receive "fair notice" of what conduct was prohibited or mandated. The Fifth Amendment of the Constitution provides "nor shall any person be deprived of life, liberty, or property, without due process of law." Fundamentally, due process requires that federal agencies make clear what is expected of regulated entities before seeking to impose penalties for alleged violations of their regulations. All too often, regulatory agencies take advantage of the Chevron doctrine to declare their own regulations ambiguous, then announce an interpretation (to which the court must defer) which puts the citizen in federal prison for failing to guess what that interpretation would be.

In 1994 Justice Thomas, in dissent, unmasked the danger in allowing an agency to declare its own regulation ambiguous under the Chevron doctrine, then "interpret" it into a new rule:

"It is perfectly understandable, of course, for an agency to issue vague regulations because to do so maximized agency power and allows the agency greater latitude to make laws through adjudication rather than through the more cumbersome rulemaking process. Nonetheless, agency rules should be clear and definite so that affected parties might have adequate notice concerning the agency's understanding of the law. . . . An agency whose powers are not limited either through meaningful statutory standards or . . . rules poses a serious potential threat to liberty and democracy."7

As the Supreme Court explained in Daniels v. Williams,8 the purpose of the Due Process Clause is to prevent government from abusing its power or employing it for purposes of oppression. The Due Process Clause, quite simply, forbids all deprivations of property by government action that is arbitrary, unreasonable or violative of fundamental principles of fairness.9

Judge Patricia Wald of the U.S. Court of Appeals for the District of Columbia Circuit commented recently in a major speech that enforcement of unclear and ambiguous regulations at the expense of a company's due process rights is an increasingly serious problem, particularly because of the increasing complexity of regulations. She said, "legislators and rulemakers would do well to proceed in the immediate future with even greater caution than in the past in insuring that their rules give fair notice of what is expected of the regulated and fair procedures for disputing alleged violations."10

Agency officials have successfully pressed this point in citizens' suits against them. Agency officials may be held liable for violating the law only when applicable legal requirements are "clearly established at the time of the conduct at issue."11 Why should federal agency officials be immune from liability when they cannot determine what is expected of them under regulations which are "voluminous, ambiguous, and contradictory,"12 while ordinary citizens may be sent to prison on the basis of that same federal official's interpretation of those same regulations? Yet, as I discuss later in this testimony, many Americans have been prosecuted and even imprisoned on the basis of just such ambiguous, voluminous, and contradictory regulations—as interpreted by the very agency which is prosecuting them.

III. CRIMINAL PROSECUTION OF PERSONS WHO HAD NO INTENTION OF VIOLATING AGENCY REGULATIONS VIOLATES CONSTITUTIONALLY PROTECTED DUE PROCESS RIGHTS AND DETERS COMPLIANCE EFFORTS.

Most nonregulatory crimes include an element of criminal or specific intent, also known as a mens rea requirement. Specific intent is a mental state above and beyond that which is required to do the actus reus or prohibited conduct. Courts normally require this guilty-knowledge element because criminal laws are meant to punish people for and deter them from committing harmful acts.

However, there is a category of crimes called "public welfare offenses," in which courts have severely diminished, if not abrogated, the mens rea element. The sale of adulterated drugs under the Federal Food, Drug and Cosmetic Act ("FDCA") is often cited as a "public welfare offense" in that it seriously threatens the community's health or safety. A "public welfare offense" is a crime in which the proscribed activity is so dangerous that the actor should presume the activity is likely to be regulated. To convict a person of violating the FDCA or other "public welfare offense" statutes, prosecutors need not prove that she had knowledge that her behavior was unlawful.

To what extent are other regulatory crimes characterized as "public welfare offenses?" In United States v. Weitzenhoff13 the Ninth Circuit concluded that violations under the Clean Water Act ("CWA") and many other environmental laws are "public welfare offenses," and held that knowledge of the law is not an element of a CWA violation. Although it is debatable whether regulatory crimes that do not threaten human health should be considered "public welfare offenses," most regulatory crimes are categorized as such.

In light of the "public welfare offense" doctrine, to what extent is any intent required for conviction of a regulatory crime under most environmental laws? Are environmental crimes pure strict liability crimes in that no intent is needed at all? Many courts have characterized CWA permit violations as strict liability crimes. However, a "knowing" violation should require that one knows something. Indeed, a "knowing" violation ordinarily requires the general intent to carry out the proscribed activity.

The following scenarios illustrate some "knowing" violations:

A hypothetical nuclear power plant has a CWA permit that requires that no more than 10,000 gallons per day of hot water be discharged into a nearby river. On a certain day, the hot water discharge from the plant's cooling processes amounted to 9,995 gallons.

(a) Late that night, the Defendant decided to take a hot shower in the power plant's locker room. He knew that the CWA permit limits the plant's daily hot water discharge. He had checked the plant's output immediately before his shower and learned that the plant had discharged 9,995 gallons of hot water that day. He also knew that his shower would cause more than five gallons of hot water to be discharged from the plant. Nonetheless, he showered and caused the discharge of six gallons of hot water.

(b) Late that night, the Defendant decided to take a hot shower. He knew about the plant's permit restrictions for hot water, but did not know whether the plant's output was close to the limit that night. His shower caused the discharge of six gallons of hot water.

(c) Late that night, the Defendant, who had no knowledge of hot water limitations, washed the shower floor and meant to rinse away the soap with cold water from the shower. By mistake, he turned the hot water knob and caused the discharge of six gallons of hot water.

(d) Late that night, the Defendant, who had no knowledge of hot water limitations, ran through the showers and accidentally bumped into and turned on the hot water knob. He caused the discharge of six gallons of hot water.

As noted above, "knowing" violations of CWA permit requirements are criminal offenses. The accidental bump in (d) should not lead to criminal liability. The Defendant did not intend even to turn on the shower, thus he had no general intent to take the action. In (a), the Defendant had the intent to take a hot shower plus the guilty knowledge that his conduct was unlawful, circumstances which far exceed the elements for a "knowing" violation.

Lack of knowledge, seen in (b), is unavailable as a defense for a CWA violation. Mistakeoffact, like that made in (c), is generally not a valid defense to a CWA permit violation, either. The Defendant in (c) is likely to be found guilty of a "knowing" violation because he had the general intent to turn the hot water knob. Even though the Defendants in (b) and (c) were arguably guilty of mere negligence, they still can be found criminally liable for "knowingly" violating the CWA because they had the general intent to turn the knob.

With the exception of involuntary action, environmental crimes and many other regulatory violations based on "knowing" violations are strict liability crimes. No guilty mind is needed Although the preceding scenario is oversimplified and involves a relatively harmless pollutant, some reallife examples show that regulatory prosecution can be just as harsh.

IV. CASE STUDIES IN REGULATORY CRIMINAL PROSECUTION

What type of people are prosecutors targeting under the current regulatory crimes regime? Consider the following stories of Benjamin Lacy, Tuang MingLin, Ocie and Carey Mills, James Wilson, and Ray Britton, and ask yourself if the word "felon" immediately comes to mind.

Benjamin Lacy makes nonalcoholic sparkling apple cider. He was convicted in September 1995 of altering records to hide the discharge of treated wastewater from two bathrooms and apple juice runoff into Manassas Run, a tributary of the Shenandoah River. The federal agents prosecuted Lacy for CWA permit violations even though they could not find any environmental damage from the pollution. Lacy, a felon at age 74, faced up to 24 years in jail and up to $2,000,000 in fines. The Judge, citing Lacy"s old age and lifelong service to his country, sentenced him to a $10,000 fine and three years probation. His cider company was fined $25,000.32.

In February 1994, Tuang MingLin, an immigrant from Taiwan, was accused of killing five kangaroo rats in violation of the Endangered Species Act while plowing his farm near Los Angeles. Twenty armed federal and state agents seized his tractor and threatened him with a $300,000 fine and a claim for 363 acres of his 720acre farm. The prosecution lasted for more than a year before Tuang MingLin agreed to a settlement, in which he "donated" $5,000 to a local habitat conservation fund.

In 1989, Ocie and Carey Mills were found guilty of adding clean fill dirt to a wetland without a permit and unlawfully excavating a drainage ditch, in violation of the CWA. As first time offenders, each was fined $5,000, and sentenced to 21 months incarceration, followed by one year of supervised release. Their sentence was upheld on appeal even though a federal judge had found that their land likely was not a wetland at the time they added the dirt. Unfortunately, this finding was made during an evidentiary hearing that took place after their convictions were confirmed by the Eleventh Circuit Court of Appeals.

Small businessman Ray Britton took a community eyesore and turned it into an attractive townhome that anyone could be proud of. For his efforts, he faces fines of up to $125,000 for alleged environmental violations he remedied several years ago. The bayside Chincoteage Island (Virginia) property owned by William and Mary Hammond, an elderly couple surviving mainly on Social Security benefits, had become an unofficial dumping ground for island residents. It was littered with old sofas, washers, and other bulk trash. After being cited by the town for this nuisance, the Hammonds contracted Mr. Britton to clean up the lot in 1989.

In 1990, the U.S. Army Corps of Engineers issued a cease and desist order to Mr. Britton and the Hammonds, citing that the improvements to the property constituted the illegal "filling" of a wetland. Mr. Britton had never placed fill on the property.

To resolve the wetlands violation, Mr. Britton came to an agreement with the Army Corps to create wetlands elsewhere. He then proceeded to build three luxury townhomes on the lot. In 1994, he was slapped with another violation that was based on the very same facts as the 1990 violation. This time, however, it came from the Environmental Protection Agency (EPA). Now, despite his prior resolution with the Corps, the EPA is seeking to impose the maximum fine allowed under law—$125,000—against Britton and the Hammonds.

In February 1996, James Wilson, was convicted on four felony counts charging them with knowingly discharging fill material and excavated dirt into wetlands without a permit, in violation of the Clean Water Act. Wilson faced 21 months in prison and a $1 million fine, as well as $5 million in fines against his contracting business. The crime Wilson committed was "sidecasting"—allowing dirt to fall to the side while digging ditches across the property. Fortunately for Wilson, the Fourth Circuit threw out his conviction on the grounds that the government had failed to prove its case. Unfortunately, the U.S. Attorney in Baltimore has chosen to reprosecute him for the same offense.

CONCLUSION

Congress has effectively issued a "blank check" to federal agencies, allowing them to write, interpret, and enforce rules which effectively create new federal crimes. This unchecked power violates the constitutional notion of separation of powers, and allows the agencies to violate constitutional requirements of due process.

Citizens remain subject to tens of thousands of unclear and inconsistently implemented and enforced regulations, with potential exposure to millions of dollars in penalties and hundreds of years in federal prison for unwitting violations. Congress has just begun, through this hearing and others, to peer under the rock of regulatory zeal. Soon Congress must decide how to handle what it has found underneath.

Congress cannot shirk its duty as the primary lawgiver, especially where the criminal law is concerned. Agencies need to know the limits on their rulemaking authority. They need to know what, how, and when to prosecute. Most importantly, the public needs to know these things as well—what activity is illegal, what is the possible penalty, and what actions must they take to comply with the law.

I congratulate the Subcommittee for addressing this important issue, and I would be pleased to answer any questions you may have concerning my testimony.

* Roger Marzulla, the new Chairman of the Environmental Law & Property Rights Practice Group, is a partner in the Washington, D.C. law firm of Marzulla & Marzulla, specializing in environmental and natural resource law. He previously served as Assistant Attorney General in charge of the Environment and Natural Resources Division of the U.S. Justice Department.